Lunch with the FT interviews Niklas Zennström

Sifted’s John Thornhill has lunch with Skype and Atomcio founder Niklas Zennström. Good conversation about technology, venture capital and Europe.

One highlight is that Skype alumni has created 910 companies including 15 unicorns. I think this mafia/alumni effect is one of the most important for the development of a startup ecosystem over 10-20 years after a major exit.

”In Silicon Valley, he says, they talk about the “PayPal mafia”, the founders and early employees of the payments company, including Elon Musk, Reid Hoffman and Peter Thiel, who went on to found or run other successful companies, such as Tesla, LinkedIn and Palantir. Zennström says a similarly dynamic network effect is developing in Europe, even if he does not like the word “mafia”. Former employees of Skype have founded 910 companies including 15 unicorns, or start-ups valued at more than $1bn. In total, he says, the European tech ecosystem is worth about $3tn (roughly the same as Apple’s market valuation on a good trading day).”

Epic Games lay off 16 % of staff

Epic Games, creator of Fortnite and Unreal Engine, is laying off 16 % of its staff (or 830 people) to become profitable again. According to company founder and CEO Tim Sweeney it is mostly outside of core bets.

It’s been a while since a high profile company did a larger layoff and there’s been chatter, e.g. Saleforce, that technology companies are starting to hire again. The future remains uncertain.

The six parts of a simple fundraising story

When raising money for a startup, there are several ways to build a pitch deck. I believe it is easier to create a great pitch deck if you build it on top of a simple and attractive fundraising story.

The fundraising story should help an investor understand (and be able to re-tell to colleagues) what you are doing, why it is important, why you are likely to build a large company, present some proof points that it is already working, and explain why you are the team to back. The primary goal is not to describe that a specific trend is important or what the market looks like.

I think the fundraising story for a seed round (or later) can be built using only six parts (which then can become twelve slides in a pitch deck and a large number of supporting documents if needed). The six parts of a simple fundraising story are:

  1. Define the problem, why it is important, and if possible why it is not already solved.
  2. What is your insight about the problem that allows you to solve in a better way than others and how big will the market be when you solve it.
  3. Describe what your product does (in as clear, jargon-free language as possible) and the key advantages users get from using your product, and why it is better than the competition.
  4. What is your current traction (e.g. growth in users, revenue and/or ARR) and what metrics (e.g. retention, renewals, NPS etc) show that your ‘economic engine’ is working already today, even if at a limited scale.
  5. Present the the team and explain why it is the right team to build this startup.
  6. How much are you raising and what you are going to achieve (not what areas of the company you are going to spend the money on) before the next round.

In which order you present the parts can differ depending on setting and medium.

This is an early version/first draft, so feedback is appreciated.

Nine things great founders do, according to Sam Altman

Good intro, including a 5 minute video, on nine aspects on building a great company by Sam Altman.

Both tactical/operational, like importance of talking to customers and having short cycle times, as well as the need for long-term commitment, the importance of not giving up when building a startup and the duty to take care of oneself (even if startups aren’t ideal for life-work balance).

How to improve the odds to raise capital for your startup

What fundamentally makes a startup succeed is that the founding team builds a product that customers like and are willing to pay for. Startups that secure funding at $50+ million share some traits and tactics, which StartupGenome have written a good report about. Some of them are: using stock options, being connected to other founders and having advisors.

I believe it is possible to increase the chance of success by having the right people actively supporting a company, but that is different from “X number of advisors increase your chance to raise capital at $50+ million valuation”.

Next generation analytics that feels like Notion

About one year ago Alliance VC invested in Stockholm-based Steep, a company that is building the modern analytics platform. The magic comes from the combination of a beautiful and intuitive user experience and Steep’s semantic layer.

Johan Baltzar, who co-founded Steep with Nino Höglund, has written about how Steep’s reports functionality feels very much like Notion. It is one example how Steep is raising the bar for all business intelligence tools.